Managing Service Profit Chain


Niranjan Gavali Sagar Kharate Siddhesh Naik Sumit Pophare Pritesh Patil

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loyal. and productive employees.  The links in the chain (regarded as propositions) are:  Profit and growth are stimulated primarily by customer loyalty.Service Profit Chain The service-profit chain establishes relationships between profitability. results primarily from high-quality support services and policies that enable employees to deliver results to customers. in turn. loyalty. and employee satisfaction. and productivity. Employee satisfaction. 1-2 . Value is created by satisfied. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. The service-profit chain is also defined by a special kind of leadership that emphasizes the importance of each employee and customer. customer loyalty.

2. Leonard Schlesinger 1-3 . W.Harvard University Research  Theory and business model evolved by a group of researchers from Harvard University in the nineties. 5. Gary Loveman. 3. James L. Heskett. 4. 1. Earl Sasser. Thomas Jones.

Service Profit Chain Internal Operating strategy and service delivery system Loyalty Service concept External Target market Customers Satisfaction Productivity & Employees Output quality Capability Service quality ‡Customer orientation/quality emphasis ‡Allow decision-making latitude ‡Selection and development ‡Rewards and recognition ‡Information and communication ‡Provide support systems ‡Foster teamwork ‡Quality & productivity improvements yield higher service quality and lower cost Attractive Value Service designed & delivered to meet targeted customers¶ needs Solicit customer feedback Lifetime value Retention Repeat Business Referrals Service value Satisfaction Loyalty Revenue growth Profitability 1-4 .

The Framework Profitability and Revenue Growth Customer loyalty Customer satisfaction External Service Value Employee retention Employee productivity Employee satisfaction Internal service quality 1-5 .

Xerox found that customers that rated them 5 (on a 1-5 customer satisfaction ranking) were six times more likely to repurchase Xerox equipment versus those at the 4 rating level. Just as important is to avoid creating terrorists: customers that become so upset the make it a point to speak out about the poor service they received at every opportunity. Xerox coined the term "apostles" to characterize the customers that rated them a 5. 1-6 .g.Linking the Service-Profit Chain  Customer  Customer loyalty drives Profit and Growth satisfaction drives Customer Loyalty E.

Linking the Service-Profit Chain  Value drives Customer Satisfaction Employee Productivity drives Value Employee Loyalty drives Productivity Employee Satisfaction drives Loyalty Internal Quality drives Employee Satisfaction Leadership Underlies the Chain's Success 1-7      .

³Know things about your customers that they do not even 8 know about themselves.Managing the Service-Profit Chain Creating and Maintaining Satisfied and Loyal Customers Creating and Maintaining Satisfied and Loyal Employees LEADERSHIP EMPLOYEE LOYALTY INTERNAL SERVICE QUALITY EMPLOYEE SATISFACTION EXTERNAL SERVICE VALUE EMPLOYEE PRODUCTIVITY CUSTOMER SATISFACTION CUSTOMER LOYALTY PROFIT ³Put customers and front-line employees first!´ ³Exceed your customers¶ expectations and needs.´ 1-8 .

000 $500.000 $Billions  A 5% increase in customer retention can increase profits from 25-85%.Customer Loyalty  Lifetime revenue of a loyal customer: Domino¶s pizza eater: Cadillac car owner: Boeing Aircraft Purchaser: $10. 9 1-9  . QUALITY of market share (as measured by loyalty) deserves as much attention as QUANTITY of market share.

1-10 .

conduct an ³exit interview´. Proper balance between full-time and part-time employees.Employee Loyalty  HOW DO YOU CREATE EMPLOYEE LOYALTY? Compensation. When a employee decides to leave the company. Job satisfaction (including empowerment). Hiring that takes into account predictions about loyalty. 11 1-11 . Carefully evaluate policies that routinely transfer employees. Career paths. Incentives that reward loyalty.

Leadership  How Much Time Does Senior Management Spend Personally Developing And Maintaining A Corporate Culture Centered Around Service To Customers And Fellow Employees? 12 1-12 .

Southwest Airlines 1-13 .

Southwest Airlines 1-14 .

The Steak n Shake Company  Steak n Shake Restaurants understands that the interaction between their Associates and their Guests is central to their long term success.  Working with The Service Profit Chain Institute. the management team at Steak n Shake has developed a 5 year plan 1-15 .

The Steak n Shake Company  Began with understanding the economic impact of truly bringing the Service Profit Chain to life.  A comprehensive implementation plan. has been developed.  This program begins with a deep understanding of the guest and associate needs and is followed by a series of initiatives to move Steak n Shake closer to its long term vision. 1-16 .

CEO... and database decision making-employees rise to the challenge. analysis.³I find that when you champion the most noble values-including service. Intuit Corp.´ -Per Scott Cook. THANK YOU. and you forever change their lives.!!! 1-17 .

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